James D. Wolfensohn
The World Bank Group
Washington D.C., January 15, 1999
On behalf of all my colleagues, I want to welcome you here to this institution and to pay special respect to the Vice President for the initiative that he has taken in bringing about this conference.
I have been trying to think over these last days what I should talk about, and I have come back to the very simple proposition that given that this conference is about re-invention, I should talk to you about re-inventing the World Bank. You have received a fair amount of advice on how to re-invent your own governments, so let me just tell you that as one of your servants - you are in fact my shareholders - I thought I might take the chance to give you both a commercial, and an example of the steps we have taken to better serve you and to try to engage in strengthening our own operations and our governance.
This morning you were talking about technology. Let me say right at the outset that the impact of technology on our institution has been enormous. Were you to have time, we could take you and show you here in the basement our new Technology Center, where at the moment we are doing more than 400 videoconferences a month, up from very few 12 months ago. As a result of these development, we now conceive of ourselves not as a Washington-based institution but as a truly international institution, as a global institution.
But we have gone further than that. We have changed from thinking of ourselves as a source of money and advice to thinking of ourselves as a global Knowledge Bank. We are putting a very significant amount of effort into capturing our own knowledge. Previously, our knowledge left when someone retired, as happens in many governments and as happens in many other organizations. Today, we are creating a body of knowledge so that we can get best practice first for ourselves and then for our clients - for you. Spontaneously, we have had 93 separate groups come forward with special interests, from justice systems to high-altitude irrigation, from pre-school education to the construction of toilets - all the things that go into some of the aspects of development. So that now you can come in, on-line, to our institution and either go through a Help Desk or go directly to the subject, where you will find an ever increasing amount of information available.
We are also now seeking from our clients their best practice. So that whenever you think about development or issues in development, you can come to us, and we will give you the good things we have done, the bad things we have done, the best international practice and, through us, get access to other government resources and to the literature. So that sitting wherever you are, whether it be in Senegal or in Cote d'Ivoire or in Brazil or in Nepal, we will have this hub of knowledge, and it will be as close as the nearest computer. And by the end of this year, every one of our hundred offices will be linked by voice data and video communication by satellite, with room in every one of our missions for people to come in and take advantage of our satellite link and our technology. With the added possibility of being able to do six-way videoconferences. If you have a problem or an issue of pre-school education, and you are in Latin America, we can link you with teachers and experts in other parts of the world in real-time with a six-way screen, and you can get it in the language that you are speaking because we do the translations downstairs.
This is not just a technological change for us. This is a qualitative change of immense proportions because it makes our institution not just an institution that you come and visit, or where you go and see our representatives - it makes our institution as close as the technology. And with 1,900 Bank staff now in the field as compared with only 200 three years ago, we have an enormous capacity to change our institution - a capacity brought about by will and by technology.
I know you discussed these issues this morning, but I wanted to give you a concrete example of how it is that an institution can change as a result of technology.
Let me turn to another subject, the subject of looking at institutional effectiveness, which you also discussed - at how we can judge by results not by volume; how we can hold ourselves accountable for performance; how we can reward performance.
This institution was like a lot of other government institutions. Our human resource program was not very valuable to me when I came. Most people's resumes and histories read the same. Everyone was good - except the people who were very bad, whose reports were very good. And the reason for that was that it was the only way to get rid of them. If you had a staff member who was very bad, you had to pass that person on to somebody else.
I learned a lot of these things as I came to understand the working of the Bank. I learned to understand what the punctuation was and what the few symbolic words were - that it was not accountability; it was a sort of gray area of evaluation and as such it was extraordinarily difficult to deal with.
We have now moved from that to 360-degree evaluation. I am being evaluated at the moment by 15 people in the Bank. And what we are doing is trying to focus first and foremost on the quality of people and on accountability. And beyond that, we are asking ourselves how is it that we can better do our job, when the statistics demonstrate that the results are not that great. Poverty, which is our main issue, is not being alleviated or helped fast enough. Inequities between rich and poor are in fact increasing, not diminishing. The environment is not improving, it is degrading. Forests are going at the rate of an acre a second. As I look at the statistics and then think that in another 25 years, we'll have another 2 billion people on the planet to add to the 3 billion people who already live on under $2 a day and the 1.3 billion who live on under $1 a day, and the 2 billion people who don't have power and the 1.5 billion who don't have clean water, we start to worry, and we ask ourselves as an institution - "If you are a good institution and part of global governance, can we go on the way that we are now in terms of the approach that we are taking and in terms of our decisionmaking and our actions?"
That led us to a very, very difficult self-assessment. Let me tell you as one who has now been through this process for three years that the notion of changing the culture in an institution that doesn't have a visible bottom line is extraordinarily difficult, particularly in a place that has 1,800 Ph.D.s and which has a record which is very significant. We have a fantastic team of people, a team of people that I am extraordinarily proud to deal with. But my colleagues and I in management have to take that group and say: "Look at yourselves in the mirror; look at the results. Can we achieve the objectives that we want, taking our culture, which has been a culture of approvals, a culture of volume, a culture that to a degree was arrogant - many of you would say overly arrogant - that has not reached out? How can you change that culture in order to make the effectiveness of what you are doing increase?"
Well, the first thing is a realization that you need to have change. And let me tell you that was a very difficult thing to get through. But bit by bit with my colleagues, we have now reached the stage where we have a number of principles that we really firmly believe in - firstly, that we can't do everything; secondly, that we must prioritize; thirdly, that we must be accountable; fourthly, that we must give you, or those of you who are our clients here, service that is particularly valuable to you and which is not done as an imposed solution, but as a partnership which you as governments embrace, endorse and own.
We had to convince ourselves that we were no longer the professor or the boss, that we were the service organization at the service of governments. For many of us, that was a difficult change in mentality.
We also had to recognize that we shouldn't be leading everything; that there are other organizations that can do it better - and not just organizations in the sense of other multilateral institutions, but bilateral institutions and civil society, from trade unions to NGOs, from parliaments to religions.
Then, the third element for us was to say what is it we are. Are we a bank? Are we a development institution? What is the difference between ourselves and the Fund? You will have seen in the press, particularly in the last year, that frequently, nobody knows the difference between us and the International Monetary Fund. Sometimes we ask ourselves what is the difference - I guess there are some people here who don't know, either. I am sure there are some people at the Fund who don't know the difference between the Fund and the Bank, either.
So we have tried to establish the fact that there are really two elements in the development process, and two elements that are not always clearly linked, but we needed to establish the framework which was ours, because unless we knew what our objectives were, unless we knew what our jurisdiction was, unless we knew what it was that we were standing for, it was impossible to organize for it because there was nothing to which you could be held accountable.
So we have moved to a situation where we now have a position where we believe we are getting close to clarity, that the Fund's responsibility is macroeconomic and surveillance, and ours is social, structural and human. And in fact, when we went back to see what the writers of the Bretton Woods institutional agreement said, it was pretty close to that.
We then had to convince ourselves that we didn't have to think all the time about what the Fund was doing and what the macro was, but that we had a body of material and a body of responsibility which was not ours to administer - that's the governments' role - but where we had to play a part, and that was in the structural, in the social and in the human. Then we thought, well, you cannot separate that completely from the macroeconomic. We are all part of the same country, we are all part of the same region, we are all part of the same planet.
Then we looked, as all of you will have in the last year, in terms of the crises around the world, and what you find is that the headlines are always monetary - a package of $47 billion; what is happening on the exchange rate, what is happening on interest rates? We make a decision ourselves what is an IDA country based on a single statistic - GNP per capita. We make a decision ourselves on what is a HIPC country, a country that can be helped in terms of reorganizing its debt, by two financial statistics. The language is financial. It is the language of finance ministers. You don't see language about the social, structural and human.
So we are inventing a language. We are inventing an approach. We are postulating - for exploration during this year - that there is a need in good governance for a dozen fundamental issues. We think that at the end of the year, the dozen may change, the formulation may change, but as a postulate, as a hypothesis, we are starting by saying that if you are going to have development, you need a dozen things that are basic, and you then need the opportunity for special things for the country.
And very briefly, what we have said is that the first thing you have to have is good governance. You have got to have governments that have the capacity, have trained people, have clear and transparent laws, where there is a confrontation from the highest level of issues of corruption. If you don't have that, you have very little chance of succeeding in your development.
The second thing we have said is that you need a justice system that works. You need laws that protect property rights, you need a contract system, you need bankruptcy laws, you need protection of human rights, varying with the country, and you need a justice system that will be clean and honest and where it will not take 10 years for you to get protection.
Thirdly, we have said, particularly after Indonesia and Thailand and Korea and Mexico and many others, that you had better be sure you have a financial system that works - not just financial institutions, but a financial system that is supervised, monitored, controlled and with people on both sides who are trained functionaries in the institutions and supervisors.
And fourthly, we have said you need a social system that works, that can protect the weak, the old, the children, the disabled, and can do something for the people who are out of work, and that social system need not be an American-style social system, or British or German - it can be a tribal system, it can be a familial system - but you need to have something that can take care of people who are suffering or aged.
So we have said that you need these four structures. Think of a country that does not have them. It's like a rowboat with a big hole in it. And then we have said there are eight other things you need. You need education. You need knowledge. You need particular attention to the rights of girls and women. You need science, and you need technology, coming under the educational area. And besides that, you need health care. There is no sense having education for kids if, in prenatal or postnatal years, they come to school already physically damaged. It doesn't work. And you also need, in order to deal with the issues of population, a healthy system so that we can do something about the population question in countries where that is possible.
But unless we roll back the $2 billion in terms of family planning, or in terms of family services, you don't have a big chance of increasing that GDP per capita. So you have education, you have health, you have water and sewerage, and the things are linked. You cannot have equity for women if they are spending five hours a day looking for water. You can't have health care unless you have sewerage, because you prolong disease. So you need water and sewerage, and then you need communications. You need roads, you need telecommunications as essential elements in terms of the structure.
And then we have said, finally, that you need three more things. You need an environmental strategy and you need a cultural strategy. We think culture is important for the maintenance of culture in a global environment, in a globalized world. And you need a rural strategy and an urban strategy.
Now, you may argue with our dozen headings, and we are going to test them during the course of this year, and we are testing them now with our colleagues in Bolivia. Our friends in Bolivia have added their national column, which is a campaign against cocaine, which happens to be something that is on the Bolivians' minds, as in some other countries it is crime or something else.
So we are asserting that there is a pattern of governance where these things interrelate with each other. You cannot, as many of us have done in the past, just take a package of projects. You need to have a holistic framework, a systemic framework, in which you operate, because if you leave out some of those things - and you may argue with my 12 - but if you leave some out, the boat is going to sink, or if it doesn't sink, it will fill with water.
And then we have said that beyond that, once you have that as the other statement of governance in parallel with the macroeconomic, you have got to say, well, how do you get there? How can we improve the methodology for getting there? And there, we have come up with a grid which has these 12 issues on the top, and down the side, the players, starting with the government. So if you can imagine 12 columns at the top and four columns going across, and the top column is what the governments are doing - federal, state, local and even parliamentary bodies. Second is what the multilaterals, the bilaterals, are doing that can be of assistance. Third is what all that range of civil society is doing, and fourth is what private sector is doing.
The advantage of this grid which we have tested already is, first of all, it forces us under whomever's leadership it is, preferably government, where there is capacity in the government, to try to get a matrix of who is doing what to whom and where, and to put it within the context of a 20-year strategy. Then the issue becomes where are the gaps, and what is the phasing, and what are the limitations of finance on the other side.
We have a dozen countries we are going to try this with. The first is Bolivia. We did not invent it in the case of Bolivia. There is a happy coincidence that in fact the Bolivians have reached this as an approach in terms of national goal-setting, which totally coalesces with what we are doing. We are extremely excited, and the Vice President and 11 colleagues were up here last week, and we are relocating our Bolivian team in the field, and we are going to give them the authority and the flexibility to spend the budget along with the Bolivians.
I am fascinated to tell you that the Bolivian team in reporting to me yesterday said: We have $3, $4, $5 million as our operating budget, and we can only do it if we don't take the expatriate allowances for moving from Washington to Bolivia. So the team is voluntarily giving up its expatriate allowances in order to go and do this in Bolivia, because they feel that they have the responsibility, and they want to get it done.
For us, this is a fantastic change. And it is teaching us that if you give responsibility and accountability, the real drive comes through, it's the drive that brought us all to this institution in the first place. It's a drive which says we want to contribute to make the world a better place and deal with issues of humanity and of poverty.
That is the result of three to five years' evolution, and it is an experiment. And we don't know whether we can make it stick, but what I can tell you is that, at least as one of your institutions, which is there to serve you, we are trying to be at the leading edge in terms of change, in terms of better governance.
If the Vice President were giving awards, we would hope we could be up for one; if he is not, he should create one for us - Leon, I wonder if you would mention that to him - because we think that what we are doing is absolutely necessary, because if you are going to change, you need to have international institutions that are changing as well. I thought I'd give you that little vignette of what is going on here and seek your help and support as we go forward to try to make this world a better place.
Thank you very much.